HOMEBUYERS in Wales will not pay tax on properties costing up to £250,000 under temporary measures announced today.

The raising of the cap on Land Transaction Tax - Wales' version of Stamp Duty - follows a similar announcement by the Treasury last week applying to England - but is only half as generous. In England, the cap is £500,000.

The starting threshold for land transaction tax will increase from £180,000 to £250,000 for the residential main rates when this new measure is introduced on Monday, July 27. It will apply until March 31, 2021.

The Welsh Government has said this will mean around 80 per cent of homebuyers liable to the main rates of land transaction tax will not pay any tax. This will be a tax reduction of £2,450 per transaction.

These changes reflect the nature of the housing market in Wales, where house prices on average are considerably lower in Wales (£162,000) than in England (£248,000). For first time buyers the average price paid is £139,000 in Wales, and £208,000 in England.

This tax reduction will not apply to purchases on additional properties including buy to let and second homes.

Finance minister Rebecca Evans has also announced savings made by adopting these temporary rates in Wales will release £30 million in new funding to support the construction of new, energy efficient social housing in Wales.

“This tax holiday will help first time buyers as well as those selling to move on, but we are taking a different direction to support jobs and house building in Wales," she said.

“While eliminating taxes for those that need extra help, the tax holiday rate also reduces the tax paid on more expensive properties to help the wider housing market

“Under these changes more than three quarters of homebuyers will pay no tax at all, an increase of 20% under our current measures.

“By setting these rates for Wales I am also able to confirm £30m to support the construction of new social housing and the much needed jobs they can deliver.”